Stocks that trade daily can get very risky when the day is already settled and the day is close to the stock’s close. The stock’s daily closing share price will probably fluctuate dramatically. It can also fall as a result of market volatility.
In most cases, it is a good idea to wait until the market price is a little more stable to trade.
Trading swings in volatility may be long enough to lose some money, so trading the entire stock at once may be more effective.
Some people have to wait for their money to mature, for example, if they are trading some investments over a year. If you can wait until that date and get rich, you have every right to do so. So, whether a stock is short or long, the right idea is to buy at the right time.
However, there are some situations where you should wait for the entire stock. It will be safer that way. Here are some common situations, with illustrations to back up.
Shorting Your Investment or Stacking the Right Amount of Shares
Sell your equity investment
Buy a stock without any shares. Then sell the stock at a higher price a year or two later. This will give you more exposure to the stock. It may also help you save money for a rainy day.
If you have a huge stack of stocks and nothing to sell, it is better to buy more shares. This will minimize the risk of losing all your money later on. Plus, if the stock falls down, you lose nothing.
You need to accumulate some stocks to get some decent returns. However, it is also important to know that investing in a certain stock may give you a certain amount of money out of the total stock market. A small amount of the total sum will be invested. If the stock falls during the day, you will have to sell some of the shares of that stock for the same sum that you could have earned. This is one of the reasons that you should not just buy the stock at the highest price.
You do not need to have a large amount of stocks in a portfolio to generate a large return. For example, if you have 1 stock, and your portfolio only contains 20 stocks, when the stock goes up 20%, you will get the 20%. At the same time, when you have less than 1 stock out, when the stock falls, you can still recoup your investment
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